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CALIFORNIA CORPORATE & SECURITIES LAW

This Time, Record Destruction Claims Are Aimed At The SEC

Most have heard the saying “do as I say, not as I do” but I expect that fewer know the full quotation.  Its author was the remarkable English polyhistor, John Selden (1584-1654).  Here’s the full quotation from The Table Talk of John Selden: Preachers say, Do as I say, not as I do.  But if the physician had…

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The Calculus of Cooperation

Yesterday, I wrote about Professor Rebecca File’s article analyzing the merits of cooperation.  Although she concluded that self-initiated investigations increased the risk of an SEC sanction, she also found that penalties are lower when an issuer undertakes its own investigation. I noted that her study doesn’t offer a clear-cut answer to whether it is better…

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Should Your Company Auto-Critique?

The last ten years might be called the decade of self criticism.  In 2001, the Securities and Exchange Commission dangled a formal carrot of leniency for firms that “promptly, completely, and effectively disclosed the existence of the misconduct to the public [and] to regulators”.  The Seaboard Report. The carrot is there but what are the…

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Three Moms Alleged To Have “Socked It To” PTA Members

Several news stories appeared this week about three Southern California mothers who allegedly used their involvement in an elementary school PTA to solicit investors in a Ponzi scheme.  According to this press release issued by the Los Angeles District Attorney, more than 30 people were defrauded out of $1 million.   Move over Mrs. Taylor, widow Jones and…

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Offering Securities By General Announcement Without Registration

Yesterday, the Securities and Exchange Commission issued this announcement regarding its settlement with two advertising executives who launched a campaign to buy a beer company through a solicitation of investors on Facebook and Twitter without first registering with securities regulators and making the necessary disclosures. It must be the week for beer offerings because just…

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More on Secondary Trading in Private Company Securities

Last April, I wrote this brief piece for the Daily Journal regarding the emerging phenomenon of secondary trading in securities of issuers not subject to the reporting requirements of the Securities Exchange Act of 1934.  Since that time, interest has continued to grow in the issue.  In December, Kerry Dolan quoted me in this Forbes.com article…

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SEC’s Proposed Whistleblower Rules Will Eviscerate Compliance Programs

Last month, I wrote about California’s whistleblower hotline in this post.  In early November, the Securities and Exchange Commission issued proposed rules for implementing the whistleblower provisions of Section 21F of the Securities Exchange Act of 1934, which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Section 21F requires, subject to various conditions, that…

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“It must be confessed! It WILL be confessed! There is no refuge from confession . . .”

In 2003, California Senator Martha Escutia introduced a bill to make “technical nonsubstantive changes” to a provision of the California Civil Code dealing with construction defects.  The bill passed out of the Senate and the Assembly without attracting a single vote of opposition.  However, a funny thing happened on the bill’s journey downstairs to the Governor’s office –…

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“This Is Not The Way Criminal Law Is Supposed To Work.”

Last week, the Ninth Circuit Court of Appeals issued its opinion in U.S. v. Goyal, No. 08-1436 (Dec. 10, 2010).  This case involved an appeal by the former Chief Financial Officer of Network Associates, Inc. (now known as McAfee, Inc.).  This unfortunate individual was indicted, tried and convicted of one count of securities fraud, seven…

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California’s Whistleblower Hotline

Yesterday, the Securities and Exchange Commission proposed rules for implementing the whistleblower provisions of the Dodd-Frank Act.  That act established a whistleblower program that requires the SEC to pay a bounty to eligible whistleblowers who voluntarily provide the SEC with original information about a violation of the federal securities laws that leads to the successful…

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